Mr. Luis Manuel CorralCo-Convenor

Alliance for Consumer Empowerment (ACE)Member, Laban ng Mamamayan para sa Katotohanan at Katarungan (Lampara)

April 2, 2012

Mindanao Power Crisis: Man-made or Artificial

The DOE just monitors the power industryNGCP Reserve Requirements

(One Taipan/Sy)-Unusually high/ less power dispatched

PSALM runs NPC thru OMAPSALM –NPC Agus 4 repairs

-Spotted 2 years ago-Spotted last year, should be repaired December-Instead repaired March/wrong time schedule (And yet water level as high as 5 months ago)

PSALM-NPC Downward unitsAgus 5, 6, and 7

Less water cascading from Agus 4 so less power

Therma Marine (Aboitiz)Power Barges 117 & 118 200 MW

(Available and very expensive)Price: P11-P14 per kwh

EDC (Lopez)Investing more in new capacity

In Chile and Peru

PSALM Privatization ofNPC Barges 101, 102, 103, 104

The problem according to the NGCP is that there is 401 MW power supply deficit in

Mindanao.(a) (b) (c) = (a) –

(b)(d) (e) = (b) +

(d)(f) = (e) –

(b)

Available Capacity

(MW

Peak demand (MW)

Surplus/deficit (MW)

Required reserve margin (MW)

Peak demand + Required reserve margin (MW)

(W/reserve margin) Surplus/deficit (MW)

1,149 1,300 (151) 250 1, 550

401

According to the DOE: It’s the Supply Problem Stupid! DOE Proposal: Focus on Supply Repair Agus 4 (one month) Rush ERC to decide favorably

contracts between 8 electric co-ops and 2 Therma Marine (Aboitiz) power barges (200 MW)

Privatize four remaining power barges 101, 102, 103, 104 and reposition them in Mindanao

According to Consumers:It’s the supply and cost of power Stupid! THE MINDANAO PEOPLES SOLUTION: FOCUS ON SUPPLY AND COST OF POWER Cheap hydro-power was intended to drive

growth of Mindanao which faced insurgencies, underdevelopment and separatist movements

According to Consumer: It’s supply and cost of power Stupid!

Cheaper power intended to drive commerce, industries and jobs creation

Expensive power will cause investors to shun Mindanao, drive away current industry and commerce, and perpetuate poverty in Mindanao

CRITIQUE OF DOE SOLUTION Palace signalling fast-track ERC approval

of expensive contracts (P8 to P14 per kwh) for power coming from Aboitiz-owned Power barges 117 and 118.

What about consumer interest? What about inclusiveness and

participation of consumers in ERC to keep profit level of Therma Marine (Aboitiz) Reasonable?

CRITIQUE OF DOE SOLUTION Privatizing last-resort power barges

leaves us with no resort to address similar shortages occurring in Luzon and Visayas

All Philippines- not just Mindanao – left to mercy of power producers who can deliberately refrain from investing in additional power capacity to create “shortages”

“Shortages” will require solutions involving expensive power

Proposed Solution No. 1 NAPOCOR Power Barges

Power Barge Maximum Installed Capacity

(MW)

Present Location

101 32 Brgy. Obrero, Iloilo City

102 32 Brgy. Obrero, Iloilo City

103 32 Brgy. Botongan, Estancia, Iloilo

104 32 Holcim Compound, Ilang, Davao Cty

Total Capacity 128

PB 104 is already part of the Mindanao grid but it’s available capacity is only 10 MW as there is a need to rehabilitate to reach 32 MW full capacity

Do not sell the power barges. Instead transfer PB 101, 102, and 103 to Mindanao and fully utilize their maximum installed capacity (96MW) and also fully utilize PB 104 (32 MW). If PSALM/NPC/DOE will follow our recommendation, then, an additional 118 MW will be available for the Mindanao grid.

Proposed Solution No. 2 NPC Agus-Pulangui Hydro-Power Plants

Installed Capacity: 982 MW Available Capacity: 622 MW

  Do not sell the Agus-Pulangui hydro-power plants.

Rehabilitate the Agus-Pulangui hydro-power plants and fully utilize their installed capacity of 982 MW. If that is done, an additional 360 MW will be utilized by the Mindanao grid.

Additional power supply 118 MW (from PBs 101 (32 MW), 102

(32 MW), 103 (32 MW), 104 (22 MW))+ 360 MW (from the full capacity

utilization of Agus-Pulangui hydro-power plants)

= 478 MW (additional power for Mindanao grid)

Proposed Solution No. 3

NGCP to reduce the 250 MW reserve capacity to only 100 MW and dispatch the reserve 150 MW for the Mindanao grid to increase supply.

Proposed Solution No. 4 Operational Management Agreement

(OMA) contract which allows PSALM to run the NPC as its own, be rescinded. The OMA obligates NPC to remit its gross receipts to PSALM for the latter to pay the stranded costs of NPC to international creditors.

NPC must be able to recover all its gross receipts, to be able able to allocate sufficient funds to the flushing and cleaning up of the siltation that is apparent in the Agus-Pulangui hydropower complex area and to expand or put up new hydropower plants.

Proposed Solution No. 5 Mindanao-based electric

cooperatives (distribution utilities) to register with the Cooperative Development Authority (CDA) because it will reduce power rates in their respective franchise areas.

Allow electric cooperatives to generate their own electricity

Electric cooperatives which are registered with CDA are exempted from paying those additional taxes such as VAT on distribution charge and national and local taxes. That will mean substantial rate reduction.

Proposed Solution No. 6 Require all power firms entering the

Philippines to invest a set percentage of their annual earnings to the development of the baseload of Mindanao as part of their cost of doing business in the country.

Proposed Solution No. 7 Government to conduct of multi-

stakeholders Mindanao Power Summit to craft the Mindanao Electricity Roadmap and the possible creation of the Mindanao Power Corporation to operate Agus-Pulangui hydro-power complex and other government-owned power generators in Mindanao.

Proposed Solution No. 8Review and amend the EPIRA. The EPIRA has not met its expected or promised results even after eleven years of its enactment.

We cannot leave to private generators task of planning and investing in power. Not in their interest.

Rate-making formula (PBR) and captured ERC making us most expensive in power in Asia, number 5 in the world

We will miss out on investments and jobs they create

Proposed Solution No. 9 Focus on the development of more hydro-power plants and biomass-fired power plants which are cheaper renewable energy (estimated P5/kwh for hydro and P6/kwh for biomass)

Thank You!